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Tax incentives

Tax incentives

Submitted by keithg01 on 02. April 2016

I just read on the news that the tax incentives for the new model 3 will not be available after the first 200,000 cars are ordered. Is this true ?

dsvick |
02. April 2016

Yes and no. The tax incentives get phased out over a year's time after the manufacturer sells 200,000 vehicles. The IRS defines selling at when the title transfers. Estimates are that Tesla will sell its 200,000th car in late 2017 or early 2018. It wont let me post a link but if you Google IRS EV credit it will pop right up.

Captain_Zap |
02. April 2016

That is 200k in the USA.

dsvick |
02. April 2016

Thanks Captain, I forgot to mention that part.

OHMY |
02. April 2016

7500 credit is available until the last day of the quarter AFTER the 200,000th car is sold in the USA.

Another point to consider is that the actual credit is the LESSER of $7500 or what you owe the IRS. There is no carry forward provision. If you only owe the IRS $6000 in taxes in the year you get title, you only get a $6000 credit.

Also, you get roughly the equivalent of $0.20/gallon gasoline for the life of the car. Or batter.

Wonder how many more reservations there would be for a car if the media would stop dwelling on the $35k price and point out that "oil changes" are free for infinity, and "gas" will be 20-cents per gallon for life (unless you are on a road trip in which case it will possibly be free and almost certainly will be cheaper than 20 cents), with zero emissions…. Oh- and no timing belt.

OHMY |
02. April 2016

So if car USA delivery #200,000 is sold on January 4th, 2018, then EVERY car delivered (even if there are a million delivered) on or before June 30, 2018 will qualify for $7500 credit. Every car between July 1 and Dec 31 2018 will receive $5000 credit. Every car in Q1 of 2019 will get $2500 credit.

OHMY |
02. April 2016

Cars delivered by Tesla, that is. Not every car delivered by other manufacturers (just in case that wasn't clear)

majdi.901 |
02. April 2016

Does anyone know if I place a reservation right now, would I still be eligible for the $7,500 tax credit?

stevenmaifert |
02. April 2016

@majdi.901 - There's no way to tell. Every car Tesla has sold for delivery in the USA since December 31, 2009 counts toward that 200K limit, at which time the credit begins to phase out as others have explained. I don't know of any source for their USA sales numbers. Maybe another forum member can comment on that.

bendenajones |
02. April 2016

67K units sold and qualified for the rebate to date. They will likely hit that 200K number late 2017 or certainly by 1st quater 2018.

Red Sage ca us |
02. April 2016

OHMY: I would like to point out that I do not believe the cars have to be Delivered to the end user to qualify over the time frames you mention. They only have to be Built. No one can CLAIM the Tax Credit until they have taken possession of the car, that is true. But the eligibility of the car for the program benefit is based upon when it is manufactured. That is why you must provide the VIN to the IRS. Tesla Motors reports to them which vehicles they built and when.

In other words, going back to your example, if the 200,000th qualifying vehicle is built on January 4th... And the 1,000,000th qualifying vehicle is built on June 30th... Both the January car, Delivered in February... And the June car, Delivered in July will qualify for the Credit at the full $7,500. But a car built on July 1 would only qualify for the 50% reduced amount of $3,750.

It is a little different for Tesla Motors, because the title does not change until an end user gets the car. With traditional automobile manufacturers, title changes the instant the vehicles are loaded on a car carrier at the factory, and the paper is held by the 'independent franchised dealership' it is being shipped to. But, once sold as new a car with a particular VIN is already categorized as to what benefit might be available to its new owner.

stevenmaifert |
03. April 2016

@Red Sage ca us - Thanks for pointing that out. It's a fine point in the law that I think a lot of folks are missing.

-ABC...XYZ+ |
03. April 2016

bendenajones - that's a fairly exact number - can you source it?

majdi.901 |
03. April 2016

Does anyone know if I place a reservation right now, and when it comes time to actually place the order, and I find out I won't be eligible for the tax credit ($7,500), would I still be able to cancel my reservation? I'm still a student and I only have $25,000 saved, and I would love to have this Tesla!!

stevenmaifert |
03. April 2016

@majdi.901 - Yes; at least that's how it worked with the Model S reservation holders. Once you execute the Motor Vehicle Purchase Agreement (place your order), the reservation deposit becomes a non-refundable Deposit Applied Toward Purchase. Don't mean to be nosy, but you said you were a student. Will you have enough taxable income in the year you take delivery (probably 2018) to generate $7500 worth of tax liability that the tax credit can be used to offset? It's a non-refundable tax credit which means if you don't owe $7500 in income taxes, you can only apply the credit towards what you owe. The IRS doesn't refund you the difference. It also has to be used in the tax year you take delivery (put the vehicle in service). Any unused portion can't be carried forward or backwards to other tax years.

PhillyGal |
03. April 2016

Tesla is going to do their best to maximize credits, even if that means playing a little scheduling game and delivering lucky # 200,000 late so that it's early in a quarter and thus more people qualify.

stevenmaifert |
03. April 2016

Remember, as Red Sage points out, eligibility of the car for the program benefit is based upon when it is manufactured, not when it is delivered (sold). This works to the advantage of the traditional auto manufacturers as they build to inventory and can manufacture and stockpile thousands of qualifying vehicles between the time the 200,000th qualifying vehicle is built and the phaseout begins, whereas Tesla builds to order.

Hnj_mangi |
03. April 2016

It takes 33.7KWH to equate to a gallon of gas, KWH will run you anywhere from 7 cents to 50 depending on local rates and time if use. So delivery for most charges will be 2.31 for a gallon equivalent but you will also lose some efficiency in charging ..

20 cents will get you anywhere from ~.5 to 2kw depending on rates which would take you some where between 2 to 8 miles...